Medicare drug coverage premiums are expected to rise in 2027 after the Trump administration said Tuesday it would end a temporary subsidy that reduced monthly premiums by an average of $16.
But it’s not yet clear how much they’ll increase, or whether they will increase for all Medicare beneficiaries.
The loss of the subsidy does not translate directly to how much premiums will rise, because companies that sell Medicare Part D drug coverage take into account many factors when setting rates.
The cost to the government of the subsidy was $3.6 billion in 2026, according to KFF, a nonpartisan health policy organization. About 25 million people enrolled in Part D plans in 2026, up from 23 million two years ago.
“It’s certainly possible that without this enhanced financial support in place for 2027, some Medicare beneficiaries enrolled in [Part D plans] could face relatively steep premium increases for drug coverage next year,” said Juliette Cubanski, director of KFF’s program on Medicare policy.
Insurance companies received notice of the move late Tuesday and were examining the impact. Expected Medicare Part D rates for 2027 will be publicly announced in September.
“We are closely reviewing today’s announcement. At a time of sharply rising prescription drug costs, health plans are focused on keeping Part D coverage and benefits as affordable as possible for seniors,” said Chris Bond, spokesman for AHIP, the insurance industry’s Washington trade group.
The average estimated monthly Part D premium in 2026 was $34.50, according to the National Council on Aging. Part D premiums were already four times higher than the $8 average premium under Medicare Advantage, the privatized version of Medicare. Cubanski said higher Part D premiums in Part D in 2027 could accelerate beneficiary enrollment in the privatized plans.
The Department of Health and Human Services, which oversees the Center for Medicare and Medicaid Services, did not respond Tuesday night to a question about the amount of expected increases.
CMS said it ended the subsidy, which was intended to stabilize premiums after the agency made changes to the benefits, because “plan sponsors had sufficient experience” under the new program to support their cost assumptions.
UnitedHealthcare, which offers Part D plans, said loss of the subsidy was not unexpected. “We are committed to working with CMS, ensuring seniors have access to affordable prescription medicines,” UnitedHealthcare spokesman Eric Hausman said.